Photo: Hyundai Motors Alabama
In July, a Reuters investigation showed that SMART, a metal stamping company supplying Hyundai and Kia, has used children as young as 12 to work in the factory. The reporting has prompted various state and federal law enforcement or regulatory agencies to investigate. They discovered evidence of widespread use of child labor at Hyundai-Kia suppliers across Alabama.
Hyundai and Kia, brands owned by Hyundai Motor Group, have grown exponentially in the past years to become the third-largest automaker in the U.S. by sales. Nevertheless, Hyundai’s reputation is now tainted by recent investigations that found evidence of widespread use of child labor at its suppliers in the state of Alabama. After the initial Reuters report in July, state and regulatory agencies have started their own investigations across Hyundai’s supply chain, uncovering questionable practices in the recruiting process.
It all started with a Reuters investigation that revealed the use of child workers as young as 12 at SMART Alabama LLC, a Hyundai subsidiary in Luverne. Last August, the U.S. Department of Labor started investigating another Hyundai supplier, SL Alabama LLC. According to Reuters, the investigation revealed that the U.S. subsidiary of South Korea’s SL Corp. had employed underage workers, including a 13-year-old, at its factory in Alexander City.
Since then, the investigation has been expanded to include ten Alabama plants that supply parts to Hyundai or Kia. Several law enforcement or regulatory agencies at state and federal levels have conducted their own inquiries, Reuters has learned from two people familiar with the probes.
Other factories investigated include one of Ajin Industrial Co’s plants in the east Alabama town of Cusseta and a factory owned by Hwashin America Corp, a Hyundai and Kia supplier in the south Alabama town of Greenville. At least four of them have employed child labor in recent years, the investigations have shown.
Officially, both Hyundai and Kia prohibit the use of child labor at their production facilities and their suppliers. Hyundai sent a statement to Reuters, saying it “does not condone or tolerate violations of labor law” and requires its business partners to “strictly adhere to the law.” Kia also said it “strongly condemns any practice of child labor and does not tolerate any unlawful or unethical workplace practices.”
Following the initial Reuters report, Hyundai’s COO Jose Munoz told the news agency he instructed the carmaker’s purchasing department to sever ties with SMART Alabama LLC as soon as possible. In the meantime, Hyundai has reconsidered its position, saying that both SMART and SL have taken “corrective actions” to fire staffing agencies that hired the underaged workers.
Using third-party staffing agencies to hire workers is common among U.S. manufacturers. This allows factory owners to outsource the responsibility for screening, hiring, and regulatory compliance of their workforce. Nevertheless, the practice has been criticized by labor activists. According to a previous Reuters investigation, staffing agencies in rural Alabama have hired undocumented workers from Central America, including minors entering the U.S. territory without parents or guardians.
Hyundai operates an assembly plant in Montgomery, Alabama, while Kia has one across the state line in West Point, Georgia. Both are supplied by an extensive network of parts suppliers and staffing agencies across Alabama and Georgia, some of them owned by Korean entities. Both states are so-called “right-to-work” jurisdictions, which allows workers to reject unions.
This is one of the reasons the states have attracted numerous automakers and suppliers. The labor shortages have increased the chances that employers are less picky to keep their assembly lines staffed and avoid costly production delays. That’s because Hyundai operates a “just-in-time” production process. To avoid halting the assembly lines, the carmaker can impose heavy fines for failing to supply the parts on time.
“It seems like the stage was set for this to happen,” Terri Gerstein from Harvard Law School’s Labor and Worklife Program told Reuters. “Plants in remote, rural areas. A region with low union density. Not enough regulatory enforcement. Use of staffing agencies.”
So far, the SL Alabama LLC is the only supplier to Hyundai and Kia that was charged with violating child labor laws. It happened after authorities and law enforcement officials discovered seven workers between 13 and 16 on the SL factory floor in a raid last August. Following the investigation, the U.S. Labor Department fined the company about $30,000, while Alabama’s Department of Labor also fined SL and one of its recruiting agencies $36,000.
It all started with a Reuters investigation that revealed the use of child workers as young as 12 at SMART Alabama LLC, a Hyundai subsidiary in Luverne. Last August, the U.S. Department of Labor started investigating another Hyundai supplier, SL Alabama LLC. According to Reuters, the investigation revealed that the U.S. subsidiary of South Korea’s SL Corp. had employed underage workers, including a 13-year-old, at its factory in Alexander City.
Since then, the investigation has been expanded to include ten Alabama plants that supply parts to Hyundai or Kia. Several law enforcement or regulatory agencies at state and federal levels have conducted their own inquiries, Reuters has learned from two people familiar with the probes.
Other factories investigated include one of Ajin Industrial Co’s plants in the east Alabama town of Cusseta and a factory owned by Hwashin America Corp, a Hyundai and Kia supplier in the south Alabama town of Greenville. At least four of them have employed child labor in recent years, the investigations have shown.
Officially, both Hyundai and Kia prohibit the use of child labor at their production facilities and their suppliers. Hyundai sent a statement to Reuters, saying it “does not condone or tolerate violations of labor law” and requires its business partners to “strictly adhere to the law.” Kia also said it “strongly condemns any practice of child labor and does not tolerate any unlawful or unethical workplace practices.”
Following the initial Reuters report, Hyundai’s COO Jose Munoz told the news agency he instructed the carmaker’s purchasing department to sever ties with SMART Alabama LLC as soon as possible. In the meantime, Hyundai has reconsidered its position, saying that both SMART and SL have taken “corrective actions” to fire staffing agencies that hired the underaged workers.
Using third-party staffing agencies to hire workers is common among U.S. manufacturers. This allows factory owners to outsource the responsibility for screening, hiring, and regulatory compliance of their workforce. Nevertheless, the practice has been criticized by labor activists. According to a previous Reuters investigation, staffing agencies in rural Alabama have hired undocumented workers from Central America, including minors entering the U.S. territory without parents or guardians.
Hyundai operates an assembly plant in Montgomery, Alabama, while Kia has one across the state line in West Point, Georgia. Both are supplied by an extensive network of parts suppliers and staffing agencies across Alabama and Georgia, some of them owned by Korean entities. Both states are so-called “right-to-work” jurisdictions, which allows workers to reject unions.
This is one of the reasons the states have attracted numerous automakers and suppliers. The labor shortages have increased the chances that employers are less picky to keep their assembly lines staffed and avoid costly production delays. That’s because Hyundai operates a “just-in-time” production process. To avoid halting the assembly lines, the carmaker can impose heavy fines for failing to supply the parts on time.
“It seems like the stage was set for this to happen,” Terri Gerstein from Harvard Law School’s Labor and Worklife Program told Reuters. “Plants in remote, rural areas. A region with low union density. Not enough regulatory enforcement. Use of staffing agencies.”
So far, the SL Alabama LLC is the only supplier to Hyundai and Kia that was charged with violating child labor laws. It happened after authorities and law enforcement officials discovered seven workers between 13 and 16 on the SL factory floor in a raid last August. Following the investigation, the U.S. Labor Department fined the company about $30,000, while Alabama’s Department of Labor also fined SL and one of its recruiting agencies $36,000.
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